Covid cost burden pushes Sainsbury's into the red despite lockdown sales lift
Sainsbury’s has reported a loss of more than £260 million despite enjoying a boost to sales thanks to its status as an essential retailer during lockdown.
Overall sales in the year to March 6 jumped 7.8 per cent, including an 8.3 per cent hike in non-food business as shoppers were unable to head to non-essential retailers for large parts of the year.
But £485m in coronavirus-related costs and a major restructuring that saw some 1,150 jobs affected, sent the business to a £261m loss for the year.
Sales were boosted by a 120 per cent rise in online orders. At the group’s Argos business, sales jumped 10.9 per cent, including a 68 per cent rise in digital sales.
Chief executive Simon Roberts said that despite the hefty Covid-19 costs, the supermarket giant would still pay out a dividend to shareholders of 7.4p a share, up from 7.3p a share a year ago.
He told investors: “This year’s financial results have been heavily influenced by the pandemic.
“Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high.
“Our full-year direct Covid-19 costs were £485m, leading to a 39 per cent decrease in full-year underlying profit.
“We are pleased to propose a full-year dividend which is in line with last year, protecting shareholder income from the full impact of Covid-19 on profits.”
Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “Sainsbury’s rose to the challenge of helping feed the nation during lockdowns, but the costs of operating through the crisis have seriously dented its bottom line.
“The extent to which customer behaviour is changing now that the virus has been suppressed and restrictions on shopping have been lifted, is far from clear. That’s why Sainsbury’s, like many other retailers, views the future as uncertain.
“But despite the accounting loss, it has proposed a final dividend of 7.4p per share showing its quiet confidence in continued cash generation and the expectation of a bounce back in profits by 2022 to exceed 2020 levels,” she added.